Avolon

Activity
Aircraft leasing
Transaction value
US$1,400 million
Acquired
May 2010
Realised
Jan 2016
Sector
Financial Services
Avolon

Business
Avolon is a global aircraft leasing business, headquartered in Dublin and with offices in Stamford, CT; Dubai; Singapore; Hong Kong and Shanghai. Cinven took a controlling interest in the company in May 2010, together with two other private equity firms. At acquisition, each firm contributed US$250 million of equity capital as part of a US$1.4 billion equity and debt capital-raising exercise.

Avolon provides aircraft leases and lease management services to airlines around the world, primarily focusing on the acquisition of the latest generation of narrow-bodied, fuel-efficient aircraft – the kind that are most in demand in the resilient short-haul and economy markets.  

Avolon is led by one of the most experienced management teams in the sector. Dómhnal Slattery, formerly the founding CEO of RBS Aviation Capital, one of the largest aircraft lessors in the world, is Avolon’s Chief Executive. He leads a fast growing team of approximately 45 aircraft leasing professionals that has a proven track record and a wide network of senior contacts in the airline, aircraft manufacturing and airline banking industries.

Strategy
Leasing has become an increasingly important source of financing for the airline industry. Currently more than 40% of new aircraft deliveries are leased, compared to less than 20% 15 years ago. Capital-constrained established airlines and newer, emerging airlines experiencing rapid growth look to leasing to help them adapt to changing levels of demand. Narrow-bodied, fuel-efficient, low-maintenance aircraft are in demand because they help control operating costs and offer flexibility in the resilient short haul and economy travel markets.

Against this backdrop of long-term growth in the civil aviation market, Cinven identified this opportunity to take advantage of the market dislocation in 2010 to create a leading global aircraft lessor that could benefit from the attractive long-term growth dynamics.

In addition, at the time of its establishment, due to structural issues with their parent companies as a result of the financial crisis, two of the world’s ‘big three’ aircraft leasing companies were no longer active in the market producing a shortage of capacity.

Avolon, with its experienced management team, 'clean' operating platform and the backing of Cinven and its partners, was well-placed to take advantage of this window of opportunity and has now positioned itself as one of the world's leading aircraft leasing companies.

Progress
During 2011, the company successfully completed a US$333 million equity raise from existing and new investors, and a US$465 million debt raise from Wells Fargo, Citi and Morgan Stanley as well as additional bespoke debt facilities. In October 2011, Avolon also announced a US$300 million equity capital commitment from GIC, a leading sovereign wealth fund. Avolon has now secured a total of US$1.4 billion in equity capital. In total Avolon has now raised (equity and debt) capital of US$5.3 billion.

Avolon’s committed fleet in 2014 now stands at 182 aircraft, with 41 customers in 25 countries. Avolon’s fleet is the youngest large lessor fleet in the world with an average aircraft age of 2.1 years.

In December 2014, Avolon completed its successful IPO on the NYSE. Fund 4 continues to hold a 17.3% stake in Avolon post IPO.

In August 2015, Avolon entered into an Exclusivity Agreement with Bohai Leasing Co., Ltd. with respect to the possible acquisition of 100% of the issued and outstanding common shares of Avolon.

In January 2016, Avolon announced the completion of its merger with Bohai Leasing. As a wholly-owned subsidiary of Bohai, Avolon’s shares ceased trading on the New York Stock Exchange. (“NYSE”).

Press releases

Read all Avolon press releases